China, the worldâ€™s biggest shipbuilding nation, may see a third of its yards shut down in about five years as they struggle to win orders amid a global vessel glut, an industry group said.

The yards in peril of closure have failed to get any orders â€œfor a very long period of time,â€ Wang Jinlian, secretary general of the China Association of National Shipbuilding Industry, said in an interview yesterday. They may end operations in three to five years if the â€œgloomy market persists.â€ The nation has more than 1,600 shipyards.

Chinese shipbuilders may face labor unrest after cutting jobs and diversifying into offshore equipment to offset the order slump while contending with the nationâ€™s worst credit crunch in at least a decade. China Rongsheng Heavy Industries Group Holdings Ltd. (1101), the nationâ€™s biggest yard outside state control, fell the most in almost a year in Hong Kong trading on July 3 after saying some idled contract workers surrounded the entrance of its main factory.

â€œBecause of the overall market, thereâ€™s no way out for the companies; so only the strongest will survive,â€ said Sarah Wang, a Shanghai-based analyst at Masterlink Securities Corp. (2856) â€œLife for Chinaâ€™s shipyards will be tougher this year as any form of credit crunch is critical.â€